State Treasurer Michael O'Brien is frustrated that he had to finalise his budget before the federal one and says he does not intend to do so again. Photo: Michael Clayton-Jones

''They requested changes to the parameters, which will add extra time. I can't see any way in which the Commonwealth has been sluggish.''

Those comments come against the backdrop of state Treasurer Michael O'Brien expressing frustration that he had to finalise his budget before the federal one, with Commonwealth funding for key infrastructure projects - including the second stage of the East West Link - still not locked in.

Related Content

''I'd confidently predict if I have anything to do with it, this will be the last time that Victoria has its budget before the federal budget, because it just does make the forecasting … more difficult than it needs to be,'' he said.

Mr Truss' spokesman said any suggestions the Commonwealth was responsible for delays had come as a ''surprise''.

Advertisement

The comments highlight festering tensions between the two tiers of government.

After three years of relative austerity, the Napthine government is preparing to use its strong budget position to unleash an election-year budget designed to recapture the political high ground before the November 29 state election.

The second stage of the East West Link, the development of the Port of Hastings, the sale of the Port of Melbourne, an airport rail link and funding to begin building the Metro rail tunnel are all on the agenda.

At the same time, the Abbott government is set to hand down one of the toughest federal budgets in recent memory in an effort to repair its bottom line.

A state government spokesman denied Victoria had stalled clarifying its demands. He said Victoria had been in ''constructive and ongoing discussions with the Commonwealth over Victoria's infrastructure needs, and has been since December''.

In a further sign of tensions, Premier Denis Napthine has warned that almost $1 billion worth of programs for hospitals, the homeless and kindergartens are at risk , with a range of national partnership agreements due to expire within months.

In a letter to Prime Minister Tony Abbott, Dr Napthine said failure to clarify the agreements could leave Victoria with a $940 million budget hole over the next four years, leading to cuts in family violence services, the closure of homeless shelters and hospital beds, or reductions in kindergarten hours.

Victoria remains the only state in Australia to be consistently predicting annual budget surpluses, with the government keen to deliver on its infrastructure agenda without resorting to new debt.

Victoria is believed to be demanding significantly more from the Abbott government for the second stage of the East West Link than the $1.5 billion contribution for the first stage.

''Our view is the cost of stage 2 of East West would be more than stage 1 and we would obviously like to see a commensurately greater contribution from Canberra,'' Mr O'Brien said.

Infrastructure Australia recently accused the state government of failing to submit a ''robust'' business case for independent scrutiny to justify the East West Link.